Bryan Caplan  

Tyler Long-Term Unemployment Bet

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Tyler just bet me at 10:1 that U.S. unemployment will never fall below 5% during the next twenty years.  If the rate falls below 5% before September 1, 2033, he immediately owes me $10.  Otherwise, I owe him $1 on September 1, 2033.

If you think the stakes are absurdly low, they're the highest he'd agree to!

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COMMENTS (10 to date)
Brad writes:

I think the stakes are absurdly high, I am nearly convinced that the government will manipulate the reported unemployment rate to below 5% in the next 10 years.

And before you ask, I wish I were joking.

Hadur writes:

What happens if the US government changes the definition of unemployment?

Craig writes:

It should at least be indexed to inflation.

RogC writes:

Predictions or bets for the participation rate would be more interesting. Any measure of unemployment where people drop off after a period of time becomes inaccurate during structural changes. Tyler's own predictions for the future would seem to tend toward large reductions in the employed population but could easily end up with a low U-3 value.

jeppen writes:

The multiplier of 10:1 is meaningless when the stakes are so low.

Handle writes:

I think Tyler let you off easy.

So long as the government requires that a low-skill individual be "in the labor force, unemployed, but actively seeking work" to achieve nearly the same standard of living (not just unemployment benefits) as would result from their likely employment opportunities, then many people are going to report themselves exactly in such a state.

And no one wants to hire the long-term unemployed. I wish Bewley has explored that phenomenon as well.

I'll concede that the coming (albeit somewhat delayed by the economic downturn) mass-retirement of the baby-boomers will serve to create a lot of headroom at many organizations - which may reduce unemployment amongst the highly skilled / educated.

Daniel writes:

Are you betting 2033 dollars? You should have bet 1980 dollars to make this a little bit credible...

Peter H writes:

The monetary stakes are quite low, but the reputational stakes are high. That said: 10:1? Really? I'd give you an even money bet that Tyler is right about U3 > 5% for 20 years, but 10:1! That's awfully low odds for such a long time period.

Hazel Meade writes:

I'd put the odds more like 5:1, but still, given the long-term debt projections and the demographics, I have trouble believing that the US is headed for any kind of economic boom in the next 20 years.

Still, someone could invent some spectacular new technology out of the blue. Anything's possible.

Mark Bahner writes:
Are you betting 2033 dollars?

Yes, the bet should be 2033 dollars or an equal mass of toilet paper, whichever is worth more.

P.S. Seriously though, I would bet on the side of not going below 5%. As has been pointed out, the small amount of the bet basically renders the 10:1 odds meaningless.

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